Engineer Radhames Segura, the administrator of the Corporacion Dominicana de Empresas Electricas Estatales (CDEEE), told Hoy newspaper that he has been instructed by President Leonel Fernandez to renegotiate the Madrid Accord, the agreement that fixed the prices for power purchased from generators. He said he will also be reviewing the buyback of Union Fenosa power distributors, Edenorte and Edesur. “We are going to revise, audit and renegotiate these terms,” he said. According to Segura, the government will revise the contracts signed with Haina and Itabo, as well as those signed with Cogentrix and Smith and Enron (who combined have an installed capacity for 470 megawatts). He said they hope to achieve reductions in the prices of generation, so that the distributors may access cheaper power, and thus reduce the sector’s financial deficit.
Segura told Hoy newspaper that if all the power that is demanded were being dispatched, in a fully operational system, some 800 gigawatts would be delivered, which would facilitate a cost reduction of two cents per dollar per kilowatt hour dispatched, entailing savings of US$16 million a month. He said that the system is operating with a current deficit of US$25 million. The proposed savings would reduce this shortfall to a lesser US$10 million, he estimated.
When the power system was capitalized in 1998, Segura said the original plan was for the government to sign concession and share participation agreements only, and that, once the generators and distributors had assumed their roles, they would negotiate the terms for the purchase of power amongst themselves under market conditions. Instead, contracts were signed that benefited the generators and enabled them to quickly obtain profits. He cited the case of Itabo, which was handed over by the CDE on 8 September 1999 and was already turning a profit by December of that year.
By contrast, he said that power distributors became decapitalized, and that Union Fenosa claimed that of the US$202 million in capital it had brought to the DR, it had used US$145 million to purchase power due to the increase in generation prices.
Segura said that one of the transgressions of the past government was that, while quick to point out the problems with the contracts, instead of letting them expire at the end of their five-year terms, the Mejia administration extended them for another 15 years by signing the Madrid Accord.
Various sectors in the DR continue to be plagued with blackouts that often last up to 20 hours a day. While blackouts are not unusual in the DR, their prolonged durations since former President Hipolito Mejia lost the election on 16 May are causing major losses and inconveniences to daily living.